DOC's ruling puts importers back in business

The Department of Commerce (DOC) issued an unexpected low rate of only 10.88 percent for the majority of suppliers of multilayered engineered hardwood flooring from China while two of the mandatory respondents received a rate of zero percent. The China-wide preliminary rate is 82.6 percent but may only apply to a small number of companies. Importers said that this news puts them back in business, at least until final determination.

Just days before the preliminary determination on May 20, members of the Alliance for Free Choice and Jobs in Flooring (AFCJF) were bracing themselves for a rate substantially higher than the 2.45 percent countervailing (CVD) preliminary rate imposed in April.

"This is surprising. Still, there are a lot of things going on and a lot of things will happen this summer," said Jonathan Train, president of the Alliance for Free Choice and Jobs in Flooring (AFCJF). He added, "We applaud the Department of Commerce for their conscientious efforts that resulted in finding zero as an antidumping rate for two of the three mandatory companies investigated. The fact that the third mandatory received a rate of only 5 percent of what the petitioners had originally demanded proves our point that the petitioners' claims were exaggerated and wildly inaccurate."

But Jeffrey Levin, executive vice president and chief legal officer for Mondial Trade Compliance Services & Solutions and counsel to CAHP, pointed out that just two respondents will have a zero rate with all others having an increased rate on all imports. "Even with the zero percent rates that were preliminarily assigned to two of the Chinese producers, the vast majority of imports of China — more than three-fourths of all imports from that country — are now subject to dumping duty deposits." According to Levin, the dumping margins are added to the countervailing duty margins issued last month. As a result, he said, the vast majority of imports from China are subject to a total duty deposit requirement of at least 13 percent, with a significant portion of these imports subject to a combined rate of 109 percent, according to Levin.

However, Train said that somewhere in the neighborhood of 20 percent to 25 percent of imports will be taxed at the zero percent rate, some 70 percent at the 10.88 percent and the remainder at the higher 82.65 percent rate.

Levin added that the rates assigned are temporary and that the CAHP expects the final determination rate set for October will be higher. "At the end of the day, after additional factual information is brought to light, after verification and briefings are completed and the final dumping margins are calculated, the CAHP fully expects the final rates to be substantially higher than the margins just issued," he said.

Dan Natkin, director, wood and laminate for Mannington, a petitioner and member of CAHP, said that this preliminary decision is, in fact, a step in the right direction. "Friday's determination was another positive step in the investigation. We still believe there is plenty of room for upward movement of the final calculation, particularly given the fact that the department will now be heading into the verification process. The fact remains that the department has agreed with us that there is dumping in the market, they have agreed that there is targeted dumping by 2 of the 3 mandatory respondents, they agree the dumping is having a material impact on the domestic manufacturing industry, and now more than 75 percent of all imports will be subject to tariffs in excess of 13 percent (10.88 AD plus 2.25 CVD). We are looking forward to the department's verification audits and hopefully will resolve the open issues with their choice of surrogate country," he said.

In the meantime, importers breathed a sigh of relief because the results were lower than expected and, according to these importers, they can finally get back to business.

John Himes said that the results are what he had hoped for but not what he expected. And after business being on hold for the last few months, it is a relief. "For companies like ours, it is great," he said. Ãƒ.Ã.¬Ã "From our perspective, it takes away so much of the uncertainty with customers. You look and say OK, 10.88 percent price increase, pass it through and start selling. Business has started to come back a bit so let's go forward. This is game-on."

Brenda Cashion, vice president of operations for Pinnacle, said, "We were all held hostage by this whole thing. We can get back to business. We know at what price we can sell our product to our customers and that was something that we couldn't do before." Cashion said that after missing two major selling seasons, the company will get back to making introductions. She added, however, "This fight is far from over."

The rate is indeed temporary but members of the opposition said that it gives both sides time to present more information to the DOC and it will allow business to continue for the importers. "The factories can produce throughout the summer and it gives people time to make some planned decisions," said Train.

Both sides will have five days to go through the data presented by the DOC to look for calculation errors. Once the preliminary rate is finalized, companies will be responsible for the imposed rate. If the rate jumps in October, according to Train, companies will still only be responsible for the 10.88 percent or 82.65 percent for business transactions taking place between now and the final determination.

Between now and the final determination, both sides will be hard at work compiling additional data to put before the DOC.

"Anything can happen at final," said Train. "What will happen between now and final is the opportunity for both sides to present more evidence. These rates are temporary until the final determination this fall. We are confident the rates announced at that time will be even lower. [This result] affirms our belief that the whole case will be dismissed at the ITC final."

Said Levin, "The CAHP has in hand data and information not yet considered by the Commerce Department which we have strong reason to believe will greatly alter the preliminary calculations, and which calls into serious question the accuracy of some of the information presented by the Chinese producers."